Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1887-02-01
PAtIFIC RAILROADS DEBT.
Plan to Enable the Companies to Settl
Their Indebtedness


Their Indebtedness.
The New York San, in recent issue,
says:
BY the end of the year 1897 the subsi-
died Pacific railroads will owe the Gov
eminent the enormous sum of SIG, 255,
652 10, less the amounts paid hereafter
under the present requirements; bnt as
these amounts are made up of net earnings,
and therefore are always variable, it is i'm
possible 70 say anything more about them
| than that it is certain that these earnings
will not pay the debts. By decision of the
| Supreme Court of the United States no
part of this debt, principal or interest, is
payable till the subsidy bonds have ma
tured, which will be in 1897.
The entire amount of this debt, what
ever it may be- is subject TO the prior liens
created by the first mortgages of the COM
panies, which amount at present to S145,-
007,605. In other words, tue Government
holds second mortgage, with an amount
at least equal to its own debt ahead of it
and if for any reason the railroad COM
panies cannot pay when the debt is DUE
the Government must foreclose its second
mortgage and take for its debt what the
railroads will sell for over and above the
| first mortgages, or else buy in and operate
| the roads subject to the first mortgages and
| the interest charges thereon.
Now it will generally be admitted that
neither of these courses is likely to prove
etficacious, for, after all, what the Govern
ment wants is to collect its debt and not to
buy or operate railroads. Although this
debt has been paid many times over in
increased value of the public lands, in in
creased taxation. in transportation of troops
and military supplies, in public con-
venience and accommodation, and es
pecislly in uniting the East and the West.
and facilitating the national defense; and
although nobody at the time the roads were
ouiit ever counted on the repayment of the
subsidy, that repayment is now matter
of extraordinary national importance, so
extraordinary, indeed, that ii is surprising
that the President has not taken up the
question and given his views clearly and
distinctly to Congress as to the best method
of dealing with the subject. lie has not
done this, but has contented himself with
general approval of the plan recommend
ed by the Secretary of the Interior.
What is the plan? 1t is contained in
what is known as the Cultivate fund
ing bill now before Congress, for APP
proval or rejection. This bill proposes to
extend the time for the payment of the
subsidies, to reduce the interest to the mar
ket rate, and to provide for the gradual ex-
tinetiOn of the debt, so as to render its Ill
innate payment to the Treasury not merely
probable, but reasonably certain.
If no bill looking to these ends is passed
the Union Pacific and Central Pacific must
in due time sink into bankruptcy. Then
the Government will lose the whole of the
enormous sum of money due and to be
come due from these two Pacific railroads
If the bill is passed, the Government will
i -, l.,
90 on performing their service to the public
ana making enough besides to keep them
in condition and build the new branch lines
that are necessary TO protect themselves
from the encrOachment of rivals that are
now invading their territory and destroying
and carrying off their business.
This seems to US to sum UP the whole
matter fit is better that the Government
should get back its money and that the
railroads should be kept alive, why, then,
this bill should pass. If it is better that
the railroads should be wrecked and the
Government should lose its money, why,
then, the present state of things ought to
be continued and intensified until its con-
sequences are fully realized in the ruin of
| the railroad companies and the loss of the
millions which they owe and will owe to
the Treasury.
In considering this subject, no account
whatever should be taken of the Credit
Mobilier fraud or any other alleged frauds
or wrongs said to have been committed on
the part of these enterprises. Neither
should any attention be paid to the charge.
" hch we believe to be entirely false, that
the present administration of these COM
panies has in any way attempted to corrupt
any selfish or venal Congressman. These
are old stories and mere side issues and
have nothing to do with the main ques-
ton. That question relates exclusively to
the duty of Congress to save the money
that is coming to the Government, and to
get il into the treasury by the best practi-
cable means. We think it is the duty OF
Congress also to cave, and not to destroy,
the great public interests that are connected
with these railroads and while Congress
has nothing to do with the private interests
involved, the fact that there is vast body
OF innocent private stockholders, who will
be injured or ruined by the wrecking of
these railroads, or saved by saving them,
may properly be considered as q make
weight in the case.
But, above all, we think ii is the duty of
the Democratic party to determine this
whole controversy, once for all, by such
reasonable safe and advantageous settle
ment as this bill proposes. so that it Will
never again come up to trouble Congress or
the Executive and if common sense and
business judgment is allowed to decide the
votes of Senators and members, such will
be the conclusion.